May 6, 2004

 

 

Grain Harvest Predicted To Fall Short Of World Demand
 

This year's world grain harvest will increase to a record level. But it will still fall nearly 60 million tons short of what 6.4 billion people and more than 1 billion livestock will consume, an environmental group predicted Tuesday.

 

The group and a University of Missouri agricultural economist agreed the estimate was "in the ballpark". They cited usual problems with weather, crop diseases and insects; new worries from falling water tables, especially in the United States and China; and rising temperatures worldwide.

 

The 2004 harvest is estimated at 1.89 billion tons, the highest figure ever. However, consumption is projected at 1.95 billion tons, said Lester Brown, president of Earth Policy Institute, an environmental research group.

 

According to Brown, "This is good news for farmers and bad news for consumers. As grain prices go up, farmers benefit while consumers suffer. It will be especially difficult for the 3 billion people who live on $2 or less a day."

 

Moreover, it would mark a fifth straight year of grain harvest shortfalls and draw down world stocks to below 300 million tons, Brown said. Such a supply, the lowest level ever, would probably last less than 56 days.

 

In 2003, the 1.83 billion tons of world grain production fell short of the 1.94 billion tons consumed, according to the Agriculture Department's latest statistics, in April. That meant about 59 days of world supply. The lowest ever was 56 days in 1972, when wheat and rice prices doubled because of scarcity after poor grain harvests.

 

Restoring world grain stocks to about 70 days worth, a minimal level for global food security, would require boosting 2004 production by at least another 55 million tons after making up the shortfall, Brown stated.

 

Jordan Dey, a spokesman for the United Nations World Food Program, said lower production might not mean more people going hungry. "We're looking at 840 million people who go to bed hungry every night. There's enough food to feed those people; the problem is that they don't have the money to purchase the food."

 

Brown commented that U.S. consumers already coping with stagnating wages and rising gasoline prices could be squeezed further by higher food prices. "We are looking at substantial rises in grain and food prices as early as this fall," he said.

 

In each of the last two years, record or near-record heat waves have taken the edge off the world grain harvest. In 2003, Europe bore the brunt of the rising temperatures as an August heat wave shrunk grain harvests from France eastward through the Ukraine. In 2002, intense heat reduced the harvests in India and the United States.

 

"The environmental trends are beginning to kick in, and that includes soil erosion and desertification," Brown said. "Both of them make it much more difficult for farmers to continue expanding production at a rapid pace."

 

According to Pat Westhoff, who helps direct the university-sponsored Food and Agricultural Policy Research Institute in Columbia, Missouri, which is mostly funded by Congress through USDA, he generally agreed with Brown's estimates and overall assessment.

 

"They are in the ballpark of what's plausible," he said. "But there are several layers of uncertainty here.... If we had above-average yields, we could have enough production to actually build stocks this year. On the other hand, if we do have below-average yields, things could get tight."

 

Westhoff said, "A lot of the reduction in stocks is tied to China." In 2003, the grain harvest in China was 322 million tons, down from 342 million tons in 2002, according to USDA statistics.